Financial Services Committee

Blog

As the House marked "Financial Independence Week,” lawmakers passed eight bipartisan regulatory relief bills to promote a healthier economy, preserve consumer choice, and help more Americans achieve the dream of financial independence.

“The American dream for so many low and moderate income Americans is that one day they can achieve financial independence,” said Chairman Jeb Hensarling (R-TX). “But, regrettably, over the last six years, middle income paychecks have remained flat or have actually been slightly lower; we know that middle income bank accounts are a lot lower. Part of the problem, frankly, has been the Dodd-Frank Act. After its passage the big banks have gotten bigger, the small banks have gotten fewer, the taxpayer has become poorer.”

The other two bipartisan bills both deal with making sure lower and middle income Americans have affordable housing choices.

H.R. 685, the Mortgage Choice Act, sponsored by Rep. Bill Huizenga (R-MI), was approved 286-140. The bill provides clarity to the calculation of points and fees in mortgage transactions, allowing more loans to be classified as Qualified Mortgages and increasing affordable options for borrowers.

"Hardworking families should not be denied access to a qualified mortgage because of technicalities that are largely out of their control," said Rep. Huizenga, Chairman of the Monetary Policy and Trade Subcommittee.

The bill’s sponsor, Rep. Stephen Fincher (R-TN), saidthe bipartisan bill will protects "financing options for the millions of Americans who rely on manufactured housing. New regulations that fail to recognize the uniqueness of the manufactured housing industry are taking options off the table for low-income families.”

H.R. 650 passed the House 263-162.

More Indictments of Export-Import Bank Employees Possible, Members Learn at Joint Hearing

Members attending a joint hearing of the Financial Services Monetary Policy and Trade Subcommittee and Oversight and Government Reform Health Care, Benefits and Administrative Rules Subcommittee heard the Export-Import Bank’s acting Inspector General reveal that future indictments surrounding theBank’s activities are possible.

Earlier in the week, the Justice Department charged a former Ex-Im loan officer with bribery, alleging 19 occasions when the former employee accepted cash and other things of value in return for “being influence in the performance of his official act,” the Wall Street Journal, The Hill and other media outlets reported.

“While this is disturbing enough, the fact that we learned of this only at the end of nearly three hours of testimony, is further evidence of the Bank’s continued and brazen efforts to avoid transparency and accountability. With the Bank’s charter expiring this summer, this adds to the already long list of significant concerns we have over its future viability,” said Chairmen Hensarling, Jason Chaffetz, Huizenga and Jim Jordan.

Earlier in the hearing, Subcommittee Chairman Huizenga noted that "since its creation, Ex-Im's taxpayer subsidy has grown exponentially to a whopping $140 billion cap. As the national debt continues to climb over $18 trillion, many fear that these taxpayer-backed loan guarantees put taxpayers dollars at significant risk and raise concern that the Ex-Im is looming towards yet another bailout that the American people simply cannot afford. It has been claimed that while the Export-Import Bank is a self-sustaining agency that receives a net appropriation of $0 from Congress, because these bank loans are backed by the full faith and credit of the U.S. government, I believe and many others believe that American taxpayers are at risk if these banks' projects fail. It's important to note that the bank has already received a congressional bailout previously,” Chairman Huizenga said, noting that “from 1992 to 1996, Ex-Im received $9.92 billion in direct appropriations from Congress and the American taxpayers."

Ex-Im is “beyond repair,” said Health Care, Benefits and Administrative Rules Subcommittee Chairman Jordan (R-OH). “The reality is that 99.9% of small businesses across America get no assistance from the Ex-Im Bank. The bank is a beneficiary to some of the largest companies in America. I don't fault large companies. They're great, we're glad they're here, we're glad they do the great things in the economy, but they don't need middle-class taxpayers' help to succeed."

The Financial Institutions and Consumer Credit Subcommittee held a hearing on Wednesday to hear from community-based lenders and service providers about how the regulatory burden of the Dodd-Frank Act is harming their customers by restricting access to affordable credit.

“This Committee has already heard testimony and explored the significant regulatory onslaught and resulting market consolidation facing depository institutions - our nation’s community banks and credit unions. Today, I am pleased to welcome our witnesses who represent many small businesses and community-based financial institutions to hear their perspective on ever-increasing regulatory burdens,” said Subcommittee Chairman Randy Neugebauer (R-TX). “We must push forward in our bipartisan efforts to provide regulatory relief for our Main Street financial institutions and protect the financial independence of the individuals and families they serve.”

Dennis Shaul, who served as a senior advisor to former Chairman Barney Frank (D-MA) and is now CEO of the Community Financial Services Association of America, told the subcommittee, “federal legislation that was intended to reform Wall Street has instead been interpreted by the Bureau in ways never intended by Congress ─ to the detriment of consumers.”

"A law that was meant to improve accountability and transparency in the financial system and protect consumers is now being implemented in ways that are anything but transparent. Instead, the CFPB is using suspect and biased data and unpublished research products to support presumptive claims against disfavored nonbank financial products,” added Mr. Shaul.

"The average guy in the oil field that I represent, they come and tell me, 'What business is it of yours, the government, if I want to borrow a $100 today and pay back a $120 at the end of the week,'" said Rep. Steve Pearce (R-NM). “So what you're going to do is you're going to force these people out of business by putting these caps on here and, at the end of the day, the guy borrowing the money says, ‘What business is it of the government if I want to borrow a $100 to get me through the next payday, but you would choke that opportunity off.’"

The Housing and Insurance Subcommittee held a hearing on Thursday to find ways to increase the role of the private sector in affordable housing.

Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, “We need to look at innovative ways to do more with less, including increased private sector participation in public and affordable housing. And while private capital may not work in every instance, it’s essential that we examine the track record of demonstration programs like Moving-to-Work and the Rental Demonstration Assistance program and public-private partnerships so we can serve more people in need with the limited resources at our disposal. In today’s hearing we will hear from witnesses who have first-hand experience in forging partnerships that benefit communities in need. These are some of the many people and organizations striving to make a difference; we need to provide them with greater flexibility to meet the growing demand they face."

So, what will the future of housing look like? If the objective is to build a system that protects taxpayers and homeowners and allows for a smarter housing safety net, the answer is reform. To ensure efficiency, we need organizational reform at HUD and leadership at the FHA and the Federal Housing Finance Agency that understands the importance of risk management. To protect taxpayers, the FHA must return to its mission and allow for more private market participation. To create a stable housing economy, we need to continue to press for responsible housing finance reform that encourages a culture of sustainability among homeowners. To help those most in need, we must push for innovation at HUD, the U.S. Department of Agriculture and other federal agencies that need to reduce the regulatory burdens that those who work tirelessly to serve their communities face.

The economic logic is clear. Everybody wants more private capital operating in the secondary-mortgage market. But Fannie’s and Freddie’s huge government advantages make it impossible for any private entities to compete. Congress instructed that mortgage-guarantee fees be raised to the level where private financial institutions—using these institutions’ actual capital requirements and cost of capital—can fairly compete. The goal is a more robust, more private, and economically more efficient mortgage market. Taxpayers’ exposure to losses by Fannie and Freddie will also be reduced.

Democrats (along with bureaucrats at the Consumer Financial Protection Bureau) have tried to go after car dealers and other lenders for “disparate impact” against minorities. Perhaps they should have turned that lens on themselves prior to passing Dodd-Frank. However well-intentioned Democratic lawmakers were in creating Dodd-Frank, its impact is another example of the negative consequences of over-regulation. That’s quite the opposite of “progressive.”

American Banker |No Denying Dodd-Frank’s Role in Bank M&A
“Any regulatory requirement is likely to be disproportionately costly for community banks, since the fixed costs associated with compliance must be spread over a smaller base of assets,” said Federal Reserve Governor Daniel Tarullo.

American consumers are facing a new threat to the availability, diversity and affordability of goods. Its name is Operation Choke Point and it works just like it sounds. Operation Choke Point is a program run by the federal government that, without written regulation or legislation, encourages banks to discriminate against what the government considers unsavory businesses.

The Committee marked up and passed 11 bipartisan regulatory relief bills this week. The bills are designed to help strengthen the economy, preserve consumer choice and allow more Americans an opportunity to achieve financial independence.

As the Committee began debate on the bills, Chairman Jeb Hensarling (R-TX) said “it is difficult, perhaps even impossible, to be more bipartisan or less controversial than these 11 bills that we consider today -- which means because they are bipartisan, they are modest. Although they are modest, they are not insignificant to our fellow citizens back home or to the community banks and credits unions that our fellow citizens depend on," he said.

Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-TX) said, “Today, the Financial Services Committee has begun to move the pendulum closer to the direction of reasonable regulation by taking the first step to address much-needed regulatory relief for our Main Street financial ​institutions and the consumers they serve.”

This week the Committee also approved a resolution to create the bipartisan Task Force to Investigate Terrorism Financing. The resolution passed unanimously by voice vote. Serving as the Chairman and Co-Chairman of the Task Force are Rep. Michael Fitzpatrick (R-PA) and Rep. Robert Pittenger (R-NC). Rep. Stephen Lynch (R-CT) will serve as the Ranking Member on the Task Force.

“As the United States pushes back against the tide of terror and extremism that is the enemy of freedom and peace everywhere, it must do so with every tool available – including within the financial system,” said Rep. Fitzpatrick.

Rep. Pittenger said, “America remains the primary target of radical Islamist jihadists, who seek to destroy our way of life and the freedoms we cherish. We must do all we can to mitigate that threat.”

Subcommittee Examines FDIC's Role in Operation Choke Point

The Oversight and Investigations Subcommittee held a hearing to further examine the Federal Deposit Insurance Corporation's (FDIC) role in Operation Choke Point. Operation Choke Point is a program spearheaded by the Department of Justice (DOJ) that has unfairly forced several legal businesses to shut down by closing their bank accounts with certain financial institutions. These businesses have been deemed "high risk" by DOJ and financial regulators due to an alleged higher incidence of consumer fraud, regardless of whether the business has done anything illegal.

The sole witness, FDIC Chairman Martin Gruenberg, admitted that it was a mistake for government officials, including those at the FDIC, to cut off access to financial institutions for businesses deemed as “high risk” regardless of their individual merit.

"Using the term 'reputational risk,' they [FDIC examiners] are warning banks that if they do business with gun dealers, short-term lenders, payday lenders, ammunition manufacturers, smokes apps, and other legal businesses, they will meet the wrath of the FDIC. And if you disagree, Mr. Chairman, we have emails and memos from the FDIC to prove it," said Oversight and Investigations Subcommittee Chairman Sean Duffy (R-WI). "Their purpose is to choke off the business they don't like from the banking system. I've asked Chairman Gruenberg to testify today because I want to know where he got the target list from several years ago and like the IRS, I fear that activists at the DOJ and the FDIC are abusing their power and authority and they're going out to legal businesses and in fact, they're weaponizing government to meet their ideological belief."

Rep. Mick Mulvaney (R-SC) shared the story of a constituent who owns a pawnshop. The bank where she had a 25-year business relationship with told her it could not lend to her because of the nature of her business.

Despite the FDIC's efforts to retract the initial "high risk" list and guidance that prevented innocent business owners from accessing lines of credit, the FDIC has failed to hold accountable government officials who pressured banks to stop servicing businesses.

Committee Reviews SEC's Budget Request and Operations

The Committee held a hearing to review the Securities and Exchange Commission's (SEC) agenda, operations, and Fiscal Year 2016 budget request.

While many Democrats claim the SEC is “underfunded,” Chairman Hensarling pointed out in his opening statement that the SEC budget “has grown tremendously over the years.”

“In fact,” he said, “the SEC’s current budget of $1.5 billion represents an increase of almost 35% since the passage of the Dodd-Frank Act not yet five years ago. In fact, over a 20-year period since 1995, the SEC’s budget has increased by nearly 400%. That is three times greater than our national defense budget has grown at a time when we have to fight the international war on terror.”

The hearing also gave Committee members an opportunity to question the SEC’s rulemaking activities at a time when the SEC and the Department of Labor are crafting more regulations for financial advisers.

Rep. Bruce Poliquin (R-ME) expressed concerns that the proposed regulations will make it more difficult for low and moderate income Americans to save for retirement.

Rep. Ann Wagner (R-MO), who has proposed legislation that would give Americans more freedom to seek sound financial advice, urged SEC Chair Mary Jo White to consider the "potential for increased costs" for investors as a consequence of the Department of Labor's proposed fiduciary rules.

The Export-Import Bank does not weigh the jobs it supports against those it destroys. By providing loans to foreign companies that compete with domestic ones, Ex-Im is actively eliminating American jobs.

Witnesses told the Committee on Wednesday that Washington’s growing regulatory burden doesn’t just affect a bank or credit union’s bottom line, it also restricts consumers’ choices and access to affordable credit.

This is especially true for Americans with low and moderate incomes.

"It’s not an exaggeration to say that every single week we hear from another financial institution that is having trouble meeting the needs of their customers,” said Chairman Jeb Hensarling (R-TX). I have one message here from a bank in Arkansas that says due to the Qualified Mortgage rule that they have had to cease funding mobile homes 'which have long been a source of homeownership for low to moderate income consumers in our markets.' Here is one from a credit union in California who says due to federal regulation that one of their members can no longer wire funds to a family member in Ukraine. Here is one from a bank in Massachusetts -- 'we have experienced a spike in loan declines to women,' for their investigation identified that women attempting to buy the family home to settle their divorce and stabilize their family were being declined at a high rate due to the Dodd-Frank Qualified Mortgage rules and the ability to pay rules."

In its coverage of the hearing, the Mobile Press-Registerquoted witness Tyrone Fenderson. "This job has been made much more difficult by the avalanche of new rules, guidance and seemingly ever-changing expectation of regulators,' Fenderson said. 'It is this regulatory burden and the fear of even more regulation that often pushes small banks to sell to banks many times their size.'"

Witness Peggy Bosma-LaMascus urged Congress to require “realistic and robust cost-benefit analyses of proposed regulations,” the American Bankerreported, “so the result would be smarter regulation.”

Committee Examines Impact of the International Financial System on U.S. Banks

The Committee’s hearing on Tuesday gave Members the opportunity to question Treasury Secretary Jacob Lew on a variety of important issues ranging from the international financial system to the growing regulatory burden to the ongoing transparency controversy surrounding former Secretary of State Hillary Clinton.

Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI) questioned the Obama Administration’s plans for the IMF, asking “why should hardworking, middle-income American taxpayer dollars be used to bail out other countries, especially after suffering from bailout fatigue in our own backyard dealing with Fannie Mae, Freddie Mac, FHA and a number of others?”

Others voiced concerns that the Financial Stability Oversight Council (FSOC) has ignored the harmful consequences the Dodd-Frank Act has had on community financial institutions and their customers. "The administration's insistence on defending the Dodd-Frank brand at all costs is made all the more mystifying by the fact that the primary author of the law, our former colleague Barney Frank, has identified a number of provisions that he believes should be revisited. What's more, then-Fed Chairman Bernanke, in his last hearing with us, listed multiple bipartisan legislative reforms that policy makers could unite around to improve our financial regulatory system,” said Rep. Randy Hultgren (R-IL). "They both recognized that a law that runs to 2,300 pages and imposes at least 400 mandates cannot possibly be perfect, and that changes are, therefore, warranted.”

The Durango Herald reported that Rep. Scott Tipton (R-CO) questioned why FSOC “has not reviewed the effects of these regulations on the local banks in the over 40 FSOC meetings since 2010, despite being legally required to do” under Dodd-Frank.

Committee Members also sought answers from Secretary Lew regarding former Secretary Clinton's use of a personal email address for official business. For much of the first two years of the Obama Administration, Secretary Lew served as Deputy Secretary of State for Management and Resources, making him the department’s chief operating officer.

However, Secretary Lew failed to shed any light on the issue, saying he had “no recollection” if he ever had any conversations with anyone about the State Department’s email policy and the he “didn’t pay a lot of attention to what e-mail” Secretary Clinton was using.

Subcommittee Calls for Fairness and Protection of Shareholders in the SEC's Use of Enforcement

On Thursday, the Capital Markets and Government Sponsored Enterprises Subcommittee held an oversight hearing on the Securities and Exchange Commission’s (SEC) Division of Enforcement.

Subcommittee Chairman Scott Garrett (R-NJ) questioned the SEC’s increased use of Administrative Proceedings rather than federal courts. “I strongly support the proper and stringent enforcing of our nation’s securities laws. However, the enforcement of those laws, like any other, should be done in an even-handed manner, removed from politics, with appropriate due process protections for defendants. The current SEC enforcement policies and procedures do not meet this standard and need to be improved. The SEC should be less concerned about the press releases it sends out and the headlines it receives, and more concerned about having a clear and consistent approach to enforcing the law.”

And that's not all Hultgren has done on the muni bond front since joining Congress in 2011. The 49-year-old has been one of the most vocal supporters of municipal bonds in the House and a leading co-sponsor of legislation on bank-qualified bonds. He serves on the House Financial Services Committee, which has jurisdiction over munis and other securities.

The president and Sen. Warren claim their new rule will have no impact on investors. They claim, falsely, that if you like your broker, you can keep your broker. But we have seen this Washington double speak before when the president famously said about Obamacare, "if you like your plan, you can keep your plan." In reality, this rule will restrict options and choice and will limit your freedom to keep your broker and invest in your future.

The company is also raising separation of powers arguments because of the multiple roles FSOC members play, serving as rule-maker, investigator, prosecutor, judge and jury. The company brief states: "FSOC members perform a legislative function by adopting rules that purport to set the standards used to determine whether to designate companies (as SIFIs); an executive and prosecutorial function by proposing companies to be subject to the standards they have promulgated, investigating those companies, and building the case for designation; and an adjudicative function by issuing final decisions adopting their own proposed rationales. Not only is each of these functions performed by the same body, they are also performed by the same individuals, without even a separation into offices or divisions."

Recent moves by Federal Finance Housing Agency chief Mel Watt to ease mortgage terms for delinquent and underwater borrowers could further hurt Fannie's and Freddie's profitability — and even put taxpayers on the hook for more losses.

Tuesday’s hearing with Consumer Financial Protection Bureau Director Richard Cordray was another opportunity for Republicans to promote reforms to make the Bureau accountable and transparent to hardworking taxpayers.

Republicans on the Committee are pushing for reforms to make the CFPB accountable and transparent because the Bureau is, by design, not accountable or transparent to Congress or taxpayers. Republican Members understand that real consumer protection puts power where it belongs: in the hands of consumers, not Washington bureaucrats.

“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington,” said Chairman Jeb Hensarling (R-TX) in his opening remarks. “When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away."

With its authority unchecked, the Bureau restricts, limits and infringes on the economic freedoms of the very consumers it is supposed to protect.

Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-TX), said, “I remain concerned that many Bureau actions demonstrate a regulatory paternalism that assumes the American consumer doesn’t know how to make choices for themselves. It is a dangerous scenario when government bureaucrats start making financial choices for people.

“In my district there is a single mother with three kids who use prepaid cards to budget finances and overdraft protection for the occasional cash shortage scenario. This single mother is barely in the financial mainstream,” continued Chairman Neugebauer. “As the Bureau moves forward with rulemaking in these areas, it must truly understand the qualitative and quantitative costs and benefits of each rule.”

Committee Republicans also continued to seek answers about why the Bureau is spending more than $215 million in renovation costs for a building it rents.

When Rep. Ann Wagner (R-MO) asked CFPB Director Richard Cordray who authorized the renovations, he outrageously replied: “Why does that matter to you?”

Until we can institute more transparent policies for the Federal Reserve, we must continue to provide rigorous congressional oversight. Last Wednesday, Federal Reserve Chair Janet Yellen testified before the House Financial Services Committee hearing entitled, “Monetary Policy and the State of the Economy.” I appreciate Chair Yellen’s testimony, particularly because I have serious concerns about Federal Reserve policies that make life more difficult for hardworking Americans and disproportionately diminish the ability of Main Street banks to provide vital capital in our rural communities.

In a statement Thursday, Pittenger said the board would “give small business owners, credit unions and community banks a seat at the table.” “Small businesses create jobs. Community banks and credit unions support small businesses. Too often, Washington regulators don’t pay attention to how their rules create unnecessary burdens for small business owners, killing job growth,” he said.

It’s all about control. It’s your money, America. The system functions quite well. Adding more pages of red tape will not improve performance, but it just may get your broker to drop your account, just as many credit lines were closed after Dodd-Frank passed.

In this light, recent policy decisions are especially troubling. The Federal Housing Finance Agency recently announced that Fannie Mae and Freddie Mac would again purchase and guarantee mortgages with as little as 3 percent down. It also decided to fund the Housing Trust Fund and Capital Magnet Fund. And, as discussed in recent testimony, the FHA announced a wrong-headed cut in the premiums it charges for insuring mortgages against default. These are carbon copies of the kind of pro-cyclical housing policies that prevailed prior to the crash.

Wall Street Journal |A Recovery Waiting to Be LiberatedHope flickered last year when the economy grew at more than a 4% clip in the second and third quarters. But then came last week’s news that fourth-quarter growth slowed to 2.2%, a gloomy revelation that the rebound was temporary. Economic growth for 2014 clocked in at about 2.3%—the same disappointing pace since the recession officially ended in 2009. What is the problem?

Committee Pushes for Accountability and Transparency Reforms at the Federal Reserve

Republicans at this week’s hearing with Federal Reserve Chair Janet Yellen raised questions about how much influence the executive branch holds over the central bank and argued in favor of accountability reforms to both protect the Fed’s independence in its conduct of monetary policy and to help give the economy greater certainty.

In its coverage of the hearing, the Associated Press reported that Republicans on the committee “challenged the central bank’s lack of accountability”

Members “seized on Ms. Yellen’s official calendar records and an October speech on inequality, just before the midterm elections, as evidence she was leaning towards the Obama administration and Democrats,” reported the Wall Street Journal in its coverage of the hearing.

While Chair Yellen and Democrats argued reforms would open the Fed to political influence, “Republicans at the hearing countered that Ms. Yellen’s calendars show the executive branch has far more access, and potentially more influence, than Congress,” the Journal reported.

“Opponents argue any reforms threaten the Fed’s monetary policy independence, but the greatest threat to that independence comes from the executive branch, not the legislative branch,” said Chairman Jeb Hensarling (R-TX). “While the Federal Reserve Chair testifies publicly before this committee twice a year, she meets weekly with the Treasury Secretary in private. And for decades there has been a revolving door between Treasury officials and Fed officials which continues even today…Fed reforms are needed and I for one believe Fed reforms are coming.”

“The Federal Reserve has proven time and time again that its government knows best approach doesn't hold the cure for what ails the economy," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "It's time we restore certainty as well as fiscal responsibility, and we must lift the veil of secrecy to ensure that the Fed is accountable to the people's representatives, the same people that created the Federal Reserve in the first place."

Capital Markets and Government-Sponsored Enterprises Subcommittee Chair Scott Garrett (R-NJ) said, "In theory, having a technocrat like the Fed to simply implement monetary changes based on basic facts, it sounds appealing. But in practice, that is not anywhere close to what happens at the Fed."

Subcommittee Examines FHA's Financial Health

The Housing and Insurance Subcommittee held a hearing Thursday on the Federal Housing Administration (FHA), the second in a series that began earlier this month with the full committee’s hearing with HUD Secretary Julian Castro.

“House Republicans have argued that the FHA was wrong to make a cut to its annual mortgage insurance premium before its reserve fund reached a statutory minimum – and witnesses agreed,” reported the American Banker in its coverage of the hearing. Witnesses told the subcommittee that the FHA’s premium reduction “is undercutting the private sector and expanding the government’s role in the housing market.”

Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, "The underlying problems at FHA have existed for years and continue to pose a threat to all Americans. If a private business like the ones represented on our panel today operated in a fashion similar to FHA, it would be placed into receivership. Yet FHA continues unapologetically down a dangerous path that we’ve traveled before."

"It never ceases to amaze me that Washington doesn't seem to be able to learn the lessons of history and recent history. So here we have Fannie Mae and Freddie Mac jumping back in and offering 30-year loans for borrowers that can only afford a 3% down payment. These loans are exempt from the requirements that another federal agency says are required under the qualified mortgage rule, the Consumer Financial Protection Bureau that are supposed to prevent a recurrence of loose lending," remarked Rep. Andy Barr (R-KY). "This is a double-standard. The American people are tired of Washington living by one set of rules and the private sector and the American people living by another set of rules."

Wagner said Obama’s reforms could drive up the cost of financial advice for low- and middle-income holders of retirement accounts, thereby depriving them of that service. Wagner also said Obama was pushing the tougher rule without adequately studying its need and potential impact.

In the midst of the financial crisis, the Democrat-controlled Congress did not do the responsible thing. Instead of comprehensively studying the crisis, Democrats in Washington threw a blanket over the financial sector in the form of the Dodd-Frank Act.Weekend Must Reads

When Dodd-Frank was being debated in Congress, critics warned that the CFPB would have little accountability and would therefore be inclined to overreach. On this issue, the agency seems determined to prove that fear right.

Ignoring existing regulation, Mr. Obama is making his usual argument that consumers are helpless against the predations of businesspeople. The solution naturally involves lawyers making lots of money. And in order to avoid industrywide chaos, the Washington bureaucracy will issue a flood of exemptions. At least Mr. Obama hasn’t promised that if you like your broker you can keep your broker.

You can watch the entire interview by clicking on the image, and below are excerpts that may be of particular interest.

On his reaction to Chair Yellen’s testimony:

“Well, I was disappointed because what we have seen now is that middle income families are still struggling in the slowest, weakest recovery in the postwar era, and yet it seems that we will continue on extraordinary measures that were employed back in 2008 and here we are in 2015. And yet they are not more transparent, they are not more accountable, and the real issue is, economists I know believe that we are best served when the Federal Reserve will communicate to the public what their monetary policy will be, and yet we didn't hear it in this particular testimony.”

On the Federal Reserve’s independence:

“[M]any of us believe that if independence is an issue, than we really ought to examine the independence of the Fed from the executive branch of government. That’s where the real threat is, not from the legislative branch that merely has asked the Fed -- you make up monetary policy, you can waive it, you can change it, but you ought to have an obligation to communicate it to the rest of us, and when you don't, you hinder economic growth, you hinder a healthy economy, you hinder middle income America that now has smaller paychecks and a smaller bank account.”

On making the Fed more transparent and accountable:

“The House Financial Services Committee moved a bill that, again, would simply ask the Fed to reveal its policy -- it's really about transparency and accountability -- just as long as they reported it to the rest of us and to ensure that the Fed, as you know, just doesn't have to do with monetary policy, it has to do with being a prudential banking regulator. And yet they are exempt from any of the provisions like cost-benefit analysis that other prudential regulators are required to do. We moved that bill in the last Congress. I intend to move a similar bill in this Congress.”

“By some estimates, the [Ex-Im] Bank’s loan guarantees have resulted in up to 7,500 lost U.S. carrier jobs, and up to $684 million of lost income for U.S. airline employees annually.” – Delta Airlines

2). The Ex-Im Bank doesn’t necessarily return money to the taxpayers.

The non-partisan Congressional Budget Office reports that if Ex-Im followed more accurate accounting rules – Fair-Value Accounting – its ledger would show a cost to taxpayers of $200 million/year, or $2 billion over 10 years. -- CBO Fair-Value Estimate
3). Only 1% of 1% of America’s Small Businesses Benefit from Ex-Im.

Congress requires that 20% of Ex-Im’s authorizations go to small businesses, but Ex-Im consistently fails to meet this statutory requirement. In reality, only .01% of America’s small businesses receive any help at all from Ex-Im.

The committee held a hearing on Wednesday to examine the fiscal health of the Federal Housing Administration (FHA) and heard testimony from Housing and Urban Development Secretary Julian Castro.

"We all recall the famous admonition from Spanish philosopher Santayana who said, 'Those who do not remember the past are condemned to repeat it.' History has taught us that the root cause of the financial crisis was not deregulation but dumb regulation and helping put people into homes they could not afford to keep. Now the FHA, with exceedingly low down payments and a recently announced approximately 40 percent cut in its premiums, appears to be doing that. All at a time where the FHA continues to violate federal law by keeping a woefully insufficient capital reserve and right after receiving its first ever taxpayer bailout,” remarked Chairman Jeb Hensarling (R-TX).

In its coverage of the hearing, the Wall Street Journal noted that since 2009 the FHA has been in violation of the law which requires the agency to have a capital buffer equal to at least two percent of the loans it guarantees. While Secretary Castro told the committee the premium cuts would push back the FHA’s return to the two percent threshold by only “a few months,” the Journal reported that Moody’s Analytics Chief Economist Mark Zandi and others have said “the fund might not return to the two percent level until 2018, two years later than an estimate made by the FHA’s independent actuary in November.”

After questioning from Rep. Sean Duffy (R-WI), “Castro acknowledged that the 50-basis-point reduction in fees would slow full restoration of the fund," noted the American Banker. "Duffy said it was proof of Republican arguments."

“Republicans cite the FHA’s need for a $1.7 billion draw from the Treasury in 2013 to shore up its reserve fund as reason to be concerned about the agency’s failure to move faster toward the two percent level,” The Hill reported in its coverage of the hearing.

Coming to your inbox on Sunday afternoon in this week’s Video Message: Rep. Andy Barr (R-KY) will discuss why hardworking taxpayers should be concerned the FHA is putting them and homebuyers at risk.

Committee Holds Markup of Views and Estimates
At Thursday’s full committee markup, Chairman Hensarling said “[The] debt….represents roughly $160,000 of debt for every American household.”

"That particular debt you see on the clock today represents roughly $160,000 of debt for every American household. That comes out of their American dream. That is funds that cannot be used to send kids to college. Those are funds that can no longer be used to pay for health care premiums that have risen. They are funds that cannot be used to capitalize a new small business so that again they can achieve their American dream," said Chairman Hensarling.

"The Budget Views and Estimates that have been put together today will help this committee and help the Budget Committee guide our proceedings to ensure that we can help low and middle-income Americans in their pursuit of happiness and that we can ensure that we do not leave a legacy of debt for our children and our grandchildren and betray the American dream; which is not the fancy new car, it is not the new home with the kitchen and the granite countertops. The American dream is ensuring that our children and grandchildren have greater opportunities, greater freedom and a higher standard of living than we have enjoyed," added Chairman Hensarling.

A reintroduced bill could allow for more homeowners in Scott County, as well the creation of new jobs, said U.S. Rep. Andy Barr of Kentucky at a roundtable discussion with Scott County bankers. The Portfolio Lending and Mortgage Act would “expand the access of mortgage credit to the citizens of Scott County and all across the country,” he said.

If the point of Dodd-Frank was to eliminate TBTF, it’s clearly failed. Instead, what it has done is prove the point of conservatives, who have consistently argued that regulatory expansion disproportionately impacts smaller players in any market. If the point of Dodd-Frank was to help consumers, that too has been a failure. Consolidation reduces both choice and proximity for most consumers, and the data from Harvard amply demonstrates that in the wake of Dodd-Frank. Rather than provide more competition for service and price, consolidation has left borrowers more and more at the whims of fewer and fewer providers. About the only success we see from Dodd-Frank is the strengthening of lobbyists on Capitol Hill, particularly from Wall Street.

The mounting costs and growing complexity of credit unions’ compliance burden are driven by two key components of overregulation: regulators’ overestimation of risk and the need to regulate it, and their underestimation of the time it takes to comply with a rule that, in the end, confers little benefit. Unfortunately, the result has become abundantly apparent as more and more credit unions, not-for-profit, member-owned financial institutions, have ceased doing business. Since 2007, the number of credit unions has declined by 1,600. That’s a whopping 21 percent drop. Under these circumstances, it is no surprise credit unions and NAFCU believe “enough is enough” when it comes to overregulation.

Several months ago this blog noted that Australia’s richest citizen secured a nearly $700 million loan for a new mining project from American taxpayers thanks to the U.S. Export-Import. Now the Australian Business Review is reporting that the project “is set for very large losses.”

In the short term, the capital costs for Gina Rinehart’s Roy Hill mine are almost certain to blow out — and a lower iron ore price will make matters worse.

If the current iron ore price decline continues into 2017 and beyond, then Gina Rinehart’s massive $10 billion Roy Hill mine project is set for very large losses when it starts production next year.

And if the reports of safety problems in the construction phase are right, then the capital costs will blow out beyond $10bn, especially if unions start playing hard ball, as they often do when there is a safety cause.

The Oversight and Investigations Subcommittee heard testimony at its hearing on Wednesday that senior officials at the Department of Housing and Urban Development broke federal law and faced minor consequences for various ethical and legal violations.

In its coverage of the hearing testimony, the Washington Post reported the alleged violations include financial fraud, sexual harassment, nepotism and conflicts of interest.

"I want to make clear to committee members that these are different allegations against different employees in different departments and divisions responsible for very different tasks, but they seem to display the same cavalier attitude that shows these employees do not believe in following the rules and they do not care about getting caught. And when they do get caught, they do not care that they are obstructing an investigation or Congress," said Subcommittee Chairman Sean Duffy (R-WI). "It’s an attitude I think Americans are learning is prevalent throughout this Administration. And it’s an attitude I think we’re quickly getting tired of."

The Washington Times noted in its coverage of the hearing that, among various violations, HUD officials violated federal law by using taxpayer money to lobby Congress for increased HUD funding.

A witness from the Government Accountability Office told the Subcommittee that her agency concluded HUD officials violated federal law by engaging in “indirect or grassroots lobbying” when they urged individuals at organizations that receive HUD funding to contact members of Congress regarding HUD’s pending appropriations bill.

A report issued last year from HUD’s Inspector General into this same matter also revealed that HUD officials attempted to cover up their illegal lobbying activity by obstructing the investigation.

NOTE: Coming to your e-mail inbox on Sunday afternoon -- this week’s Video Message will include some highlights of the Subcommittee’s hearing, with appearances by Chairman Sean Duffy and Reps. Michael Fitzpatrick (R-PA) and Bruce Poliquin (R-ME).

No matter how well intentioned the more than 2,000 pages of Dodd-Frank regulations — and tens of thousands of other federal rules — there is always room to be made more effective and responsible. This is what the CLO provisions in Fitzpatrick’s bill (as well as the 10 other bipartisan measures) do: They work to protect consumers while letting small banks and businesses do their job. Why then a sudden uproar when Congress considered Fitzpatrick’s bill? Rep. Fitzpatrick’s colleague from across the aisle, and the Delaware River, Rep. John Carney (Del.) even offered this about the bill: “The provisions in this bill have passed Congress overwhelmingly in years past. Only now has it become distorted and mischaracterized for political purposes.”

I hear all the time that "unemployment is greatly reduced, but the people aren't feeling it." When the media, talking heads, the White House and Wall Street start reporting the truth -- the percent of Americans in good jobs; jobs that are full time and real -- then we will quit wondering why Americans aren't "feeling" something that doesn't remotely reflect the reality in their lives. And we will also quit wondering what hollowed out the middle class.

Many longstanding federal and state policies privilege some businesses and not others. This tilted playing field isn’t just unfair; it’s grossly inefficient. It undermines competition, discourages innovation, and prompts businesses to expend billions of dollars in socially wasteful efforts to win the favor of politicians. But it need not be this way. A serious agenda to level the economic playing field appeals to both the progressive impulse to stick up for the powerless and the conservative urge to check government’s scope and power.

The government's homeownership scheme, like so much of what the meddling do-gooders inside the Beltway do, was viewed as grand and noble — until it all came crashing down on everyone. They turned the American Dream into a nightmare. But the social engineers never learned their lesson. In fact, they're doubling down on their mistakes.